This story is a clear indication of how important "confidence" is to a dog, and cements the findings of the Coplinger's study back in the 70's that dogs do indeed draw confidence from each other (although their study was confined to the working dog - not dogs in the daily life of a home and family).
As a breeder, I place very high emphasis on temperament testing my puppies and one of the biggest things I look for is 'confidence'.
My breed absolutely REQUIRES confidence to be an effective working dog. I raise Kuvasz which have historically (thousands of years - not just hundreds) been used to guard sheep (not "herd" sheep - these dogs just hang around with the sheep when the shepherd is away and make sure that no nasty buggers come to kill the sheep). The Coplinger study focused on flock guards like the Kuvasz. In a nut shell, one dog protecting a single goat from a pack of wolves displayed serious signs of anxiety due to lack of confidence to deal with an entire pack of wolves. Once another dog was placed with the same dog to work as a pair to protect the same goat - both dogs displayed remarkable instinct and showed no lack of confidence to perform their work. Rarely are flock guards used singularly - they are most effective in pairs, drawing confidence from each other and working as a team to watch all sides of the flock (one dog will remain with the flock while the other may give chase). Bear in mind that none of the work that flock guards do is "trained" - it's all instinct.
Thanks for sharing the story!